A franchise agreement template is basically like a business contract held between a buyer and seller who are termed as the franchisor and the franchisee. In this agreement, the franchisor legally allows the franchisee to sell their products and services without having to face lawsuit. It helps the franchisor to expand their business at the same time as it helps out the small companies (franchisees). Additionally, a franchise agreement gives the franchisee an insight into the kinds of activities they are allowed to carry out in the franchise. This agreement includes multiple terms and conditions to which the franchisee should agree in order to initiate the business deal.
Importance of Franchise Agreement
It is important for both the parties to take this agreement seriously as it is the major step which determines their business relationship. Not having a franchise agreement can cause the birth of multiple frauds and other havoc in the franchise. A license agreement is a legal process that must be executed while selling a franchise. Without carrying out this crucial step in the business deal, the parties could face communication barriers because this agreement provides complete transparency to the parties. It is ensured that both the parties are completely aware of their respective responsibilities in this deal.
Details of Franchise Agreement
A license agreement is always composed from the franchisor’s side. They can appoint someone to compose it for them or even do it themselves. It follows a basic format which starts off from the date and ends with the signature of all the included parties. However, the franchisor must remember to always make the agreement in such a way that their point is clearly being imparted through the text on the agreement. The reason to employ an agreement is that when a person is verbally carrying out a deal, they tend to forget some points and sometimes the listening party might misunderstand.
Elements of Franchise Agreement
Hence, a license agreement allows the reader to comprehend its contents and initiate the deal accordingly.
• Every agreement starts off with the basic introduction of all the parties that are included in the business deal. They could be known as the franchisor, the franchisee, the witnesses and the lawyers.
• Once the introduction part is over, the purpose behind the agreement is described. It also indicates the significance of the agreement.
• Then we reach the main part of the agreement where the franchisor states that they are willingly allowing the franchisee to sell their goods and products under their own name for a specified time period.
• The terms and conditions are listed at the end. These include permissions, prohibitions, disclosure rules and results of violating the agreement. This is the part that the franchisee would need to read thoroughly and understand the concepts and reasoning behind the terms. Because the franchise deal is carried out only if these terms are agreed to.
• Once the consent of the franchisor and franchisee is gained on all the contents of the agreement, they are required to seal the agreement with their signatures along with the signatures of the included parties.
Templates for Franchise Agreement
Source: dps.mn.gov
Source: pure.strath.ac.uk